State of Alabama

[Redneck]

Pensions are they taxable to Alabama.

[erchess]

More Facts

I'm not the expert on Alabama but I think you need to give us more facts. For example where is the payer based, who is the payer (Fed, State or Local or private company) and in what state or states did the taxpayer reside?

[FEDUKE404]

Answer

Although I do not recall preparing an AL return, a very quick search came up with the following:

Retirement Income Taxes: Social Security, military, civil service, state/local government and qualified private pensions are exempt. All out-of-state government pensions are tax-exempt if they are defined benefit plans.

Retired Military Pay: Pay and survivor benefits not taxed.

Source: http://retirementliving.com/RLstate1.html

You can look around here (page 14) for AL instructions:

http://www.revenue.alabama.gov/incometax/2010_forms/10f40bk.pdf

It would appear that private pensions are taxable, and most government pensions (including Social Security) are not taxable.

FE

[Earl]

All defined benefit plans are not taxable. These are the old type plans where you can determine what your retirement amount will be based on years and income. All others such 401k, where you determine how much to contribute but do not know what the retirement amount will be, are taxable.

[Redneck]

More info

The client retired from public school in the state of Louisiana now lives in the state of Alabama. The pension from the school board in LA is not taxable to LA. What about to AL
Thanks. Red

[Earl]

As long as the pension was a defined benefit pension it will not be taxable to the State of Alabama. Most state or government pensions were defined benefit pensions.

[Lion]

Some...

Some teachers have a traditional pension and a 403(b) or 457 plan. Sounds like AL would not tax the pension but would tax 403(b) or 457 distributions, per our southern preparers.

[Snaggletooth]

All Pensions Taxable EXCEPT

...and the Exception list is voluminous. Virtually no pensions are taxable in Alabama. The state government, of course, exempted themselves and all teachers, firefighters, municipal employees, etc. Then they exempted the military. Then all Federal agencies.

Then several years ago, they released a list of over 2800 large commercial (non-govt) companies that were to be exempted as well. Lockheed, General Motors, AT&T, etc.

So to answer the question, we would have to know the specific source. Harland (ChEAr$) practices in Alabama, and may chime in with something that will help. I have several Alabama customers along with the Tennessee crowd.

[Redneck]

...So to answer the question, we would have to know the specific source.

Snag it comes from Teachers Retirement System of Louisiana.

Red

[JohnH]

Sound like it would be taxable I Alabama, based the other responses.

(additional info: it appears that I'm 180 degrees off base on that remark. Thanks for the corrections Harlan and Earl)

[ChEAr$]

Sound like it would be taxable I Alabama, based the other responses.

Not so sure, John. Some years ago I had a new client, retired from US civil service (not taxable to AL), Fairfax county VA public school system (not taxable also) AND State of VA teacher's retirement program = not taxable.

I would venture to say LA retirement system would fit the bill for non taxability, so if OP will email me, we'll talk about it.

BTW, just returned from a delightful three days in Myrtle Beach, the CArolina EA's seminar.

[Earl]

According to the list reported by State of Alabama on February 15, 2011 the Louisiana Teachers Retirement System has notified Alabama that their pension plans qualify an a defined benefit pension plan and, therefore, are not taxable.

[JohnH]

Guess I'd better withdraw that remark.

Harlan, looks like you enjoyed Myrtle Beach.

[Redneck]

Thanks

Thanks to everyone who responded. Red